asset acquisitions - Jackson Walker LLP

proceeding to determine the fair value of the shares or pay the amount demanded by thedissenting shareholder. The proceeding is held in a jurisdiction where the principal place ofbusiness of the corporation is located or at the location of its registered office. The court isrequired to determine the fair value of the shares plus interest. MBCA § 13.30. Under theprior MBCA, it was the shareholder’s obligation to commence proceedings to value theshares. Currently forty-six jurisdictions require the corporation to initiate the litigation,while six put this burden on the dissenting shareholder.Many jurisdictions follow the MBCA by providing that the statutory rights ofdissenters represent an exclusive remedy and that shareholders may not otherwise challengethe validity or appropriateness of the sale of assets except for reasons of fraud or illegality.In other jurisdictions, challenges based on breach of fiduciary duty and other theories are stillpermitted.While the material set forth above contains a general outline of the MBCAprovisions as they relate to shareholders’ rights to dissent from a sale of all or substantiallyall of a corporation’s assets, counsel should consult the specific statute in the state ofdomicile of the seller to confirm the procedures that must be satisfied.As to the impact of dissenters’ rights on other provisions of the Model Agreement,counsel should bear in mind the potential for some disruption of the acquisition process as aresult of the exercise of those rights, and might consider adding a closing condition to permita quick exit by the Buyer from the transaction if it appears that dissenters’ rights will beexercised.See Chapter 3, “Contracts”, of the MANUAL ON ACQUISITION REVIEW.3.4 FINANCIAL STATEMENTSSeller has delivered to Buyer: (a) an audited balance sheet of Seller as at ____________,20__ (including the notes thereto, the “Balance Sheet”), and the related audited statements ofincome, changes in shareholders’ equity and cash flows for the fiscal year then ended, including ineach case the notes thereto, together with the report thereon of ______________, independentcertified public accountants, (b) [audited] balance sheets of Seller as at ____________ in each of theyears ___ through ___, and the related [audited] statements of income, changes in shareholders’equity, and cash flows for each of the fiscal years then ended, including in each case the notesthereto, [together with the report thereon of ___________, independent certified public accountants,]and (c) an unaudited balance sheet of Seller as at _________, 20__ (the “Interim Balance Sheet”)and the related unaudited statement[s] of income, [changes in shareholders’ equity, and cash flows]for the ___ months then ended, including in each case the notes thereto certified by Seller’s chieffinancial officer. Such financial statements fairly present (and the financial statements deliveredpursuant to Section 5.8 will fairly present) the financial condition and the results of operations,changes in shareholders’ equity, and cash flows of Seller as at the respective dates of and for theperiods referred to in such financial statements, all in accordance with GAAP. The financialstatements referred to in this Section 3.4 and delivered pursuant to Section 5.8 reflect and will reflectthe consistent application of such accounting principles throughout the periods involved, except asdisclosed in the notes to such financial statements. The financial statements have been and will beprepared from and are in accordance with the accounting Records of Seller. Seller has alsodelivered to Buyer copies of all letters from Seller’s auditors to Seller’s board of directors or the3148166v1- 77 -